Market Comments: Petroleum futures are higher
It's a turnaround Tuesday, as prices in the energy markets are all taking on a firm tone this morning. The bullish momentum appears linked to traders weighing Middle East disruptions and the supply outlook.
On the domestic front, the threatened closure of the Massachusetts import facility sparked concern about Northeast energy supplies.
No new news out of the Red Sea over the weekend; US Secretary of State Antony Blinken is in the UAE today discussing possible peace efforts that he says are needed to avoid a broader conflict in the Gaza Strip. Hapag-Lloyd, as well as Maersk, are continuing to divert vessels away from the disputed area this week as of Monday morning.
Overall, oil and tanker traffic in the Red Sea was stable in December, even though many container ships have been rerouted due to attacks by Iran-Houthi militants. The attacks have driven shipping costs sharply higher along with insurance premiums, but have had less impact than feared on oil flows, with shippers continuing to use the key East-West passage. The Houthis, who have said they are targeting Israel-bound vessels, have essentially attacked non-petroleum goods shipments thus far.
Shell said its fourth-quarter earnings took a hit of up to $4.5 billion in impairments that were offset by significantly higher gas trading, while its overall production volumes are on track to meet targets.
Exxon Mobil expects up to $2.6 billion in impairments in the fourth quarter for its upstream business, primarily related to idle assets in California.
